The Weekend Post - Real Estate
BUY PROPERTY, KEEP LIFESTYLE
Rentvesting offers a way into the booming housing market for a lower price
RENTVESTING could be the answer for budding buyers struggling to break into the hot market, experts say.
The strategy involves getting on the property ladder by buying an investment where you can afford, while continuing to rent where you want to live. The strategy gives young people the opportunity to achieve their dream of becoming a homeowner without having to sacrifice their desired lifestyle. But rentvesting has pros for a range of buyers, pundits revealed.
WHY RENTVEST? ?
With prices surging ng and housing afford- ability continuing to beamajorissue, Propertyology head of research Simon n Pressley ( right) said aid rentvesting was a “fantasntastic stepping stone to get people where they want to be” be”.
Mr Pressley said rentvesting was appealing for those who were priced out of their local or preferred suburbs.
“In general, the more property prices rise, the harder it will be for someone to buy their idyllic principal place of residence,” he said.
“But it doesn’t mean they can’t buy a property at all. In fact, there are a lot of Australians who can afford to buy property, but they just haven’t thought of buying like this before.”
Rather than waiting years to buy with a larger deposit, rentvesting lets buyers find a property that suits their budget or existing savings.
And this first purchase could later serve as much-needed leverage to get them closer to being able to afford their dream home one day.
“It’s a very viable option to get into the market sooner rather than later,” Mr Pressley added.
Buyer’s advocate Emily Wallace (below right) said rentvestors who jumped into the market now could also take advantage of the recordlow interest rates.
YOUR MONEY WORKS FOR YOU
A serious pro for rentvestors was that their “money will be growing at a much faster rate in a property than sitting in the bank”, Mr Pressley said. He said buyers b often worried that buying real estate meant me going into debt. But finding the right investment with a strong s rental income could c cover “100 per cent” c of the costs involved, v i ncluding paying pay your mortgage. Ms M Wallace said rentvesting c challenged the ageoldsayingthat old saying that “rent money is dead money”.
“Rent money is not dead money when you have your money elsewhere working for you,” she said. Rentvesting also gave tenants on a budget access to lifestyle locations that they could not afford to live in otherwise.
Ms Wallace said this was an appealing compromise for many Millennials and first-home buyers who were turned off relocating to affordable outer areas, in favour of staying close to their friends, families, restaurants and night-life.
BROADEN YOUR HORIZONS
Rentvestors are not limited to their area, or even their state, in order to buy a home.
“It means you can really buy a property anywhere in Australia,” Mr Pressley said. “You need to see it as a financial instrument, which means it’s not about the bricks and mortar, how many bedrooms it has, or if you like the city and how the weather is.”
Ms Wallace agreed this opened up buying opportunities immensely.
“It’s a non-emotional purchase and with that comes the straight figures, as opposed to worrying about if you can see yourself living in it,” she said.
WHO SHOULD RENTVEST?
While the pathway was ideal for young buyers or anyone who “can’t afford to buy their dream home in their chosen city”, Mr Pressley said other demographics could be drawn to rentvesting for different reasons.
“There are plenty nty of people who aren’t n’t ready to anchor r themselves to a particular dwelling, especially once international borrders open,” he said.
“If people want nt to travel and don’t t know where they want t to live long longterm, this gives them the flexibility they need.”
Even career-driven buyers who can afford the perfect property might prefer rentvesting to keep themselves open for jobs in other states or overseas. It was also an opportunity for “empty nesters” to build their savings if they couldn’t afford to retire just yet.
“Some people in that age bracket will sell the big family home and turn that equity into a big bundle of cash,” Mr Pressley said.
They could then find a rental to live in, and use the funds to buy three or four investment properties in strategically different locations to bolster their income, and later fund their retirement.
“It’s putting their family home to much better use, so in 10 years’ time they’ve had multiple properties working for them,” Mr Pressley said.
ASPECTS TO CONSIDER
Ms Wallace Wall said buyers needed to remember owning an investment inv property came ca with the responsibility s of becoming a landlord l – in addition t o b e i n g a t enant yourself.
“Yo u do n e e d t o consider con the costs (of repairs and maintenance) if it’s an older ol property, or what you will do if your y tenants leave or are misusing the space,” she said.
She also recommended finding a reliable property manager you could trust to help take care of any issues regarding any of the properties that arose.